Elon Musk Personally Pours Cold Water. SpaceX Shares Plunge 8% Ending Three-Day Rally as AI Equipment Rumors Are Strongly Denied.

TradingKey - FAA issues regulatory requirements, Musk denies AI hardware; two major negative news items spark a plunge in SpaceX stock, with a potential short-term retest of the $150 bottom.

On July 1, Eastern Time, Elon Musk's space exploration technology company, SpaceX ( SPCX) saw its stock price plunge 7.8% to close at $157.54, ending a three-day winning streak. Over the previous three trading days, SpaceX's stock had steadily climbed, rising from around its low of $150 to over $170, marking a cumulative rebound of about 13%.

The most direct catalyst for the immediate dive in SpaceX's stock price at the market open that day was regulatory headwind. On Tuesday, the Federal Aviation Administration (FAA) formally announced that to prevent conflicts of interest, SpaceX has been added to its internal employees' "prohibited investment holding list." Although this is merely a routine compliance measure by a government department, it was interpreted as a warning sign of tightening official regulatory attitudes, triggering panic selling by some institutional funds and retail investors after the opening bell.

Building on this, Musk punctured the market's widely rumored blueprint for AI terminal hardware during late trading, further driving down SPCX's stock price. During the U.S. stock market session on July 1, The Wall Street Journal and major tech media outlets reported that SpaceX had showcased a new AI handheld device—thinner than an iPhone and integrating xAI and Qualcomm chips—to major shareholders during a roadshow. In response, Musk forcefully debunked the rumor with four highly resolute words, posting a reply on social media platform X: "This is completely false."

While Musk's denial of AI phone hardware dealt a short-term blow to the stock price, it may not be a bad thing in the long run. Prior to the offering, the primary market frantically speculated on a merger or deep hardware subsidies between SpaceX and xAI, pushing SpaceX's valuation to the stratosphere. However, Musk is well aware that if the market is allowed to hype SpaceX purely as an "AI server concept stock," it would first trigger strict scrutiny from the SEC and the Pentagon regarding the use of defense aerospace funds; secondly, it would drag the company into the quagmire of Wall Street's massive liquidation of "unmonetizable AI capital expenditures."

In other words, Musk's choice to proactively pop the bubble and manage expectations at this juncture is essentially aimed at protecting SpaceX's long-term valuation from being hijacked by short-term AI hot money. This also means that SpaceX's stock price still lacks support in the short term. From a technical analysis perspective, SpaceX may continue to slide toward $150 in the near term, remaining volatile within the $150–$170 range.

SpaceX Stock Chart, Source: TradingView